Which of the following is considered a consequence of declining consumer and business confidence during a recession?

During a recession, declining consumer and business confidence typically leads to a decreased willingness to spend and invest. Consumers become more cautious about their expenditures, fearing job loss and economic instability, which results in a drop in consumer spending. This decline in spending affects businesses, leading to lower revenues and often triggering further reductions in investment and hiring.

In this context, while rising investment, increased sales of durable goods, and expansion of credit markets might be seen in a thriving economy, they are generally not the result of declining confidence. In fact, businesses are less likely to invest in new projects or expansion plans, and sales of durable goods tend to decrease as consumers prioritize essential purchases and save their money. The contraction in consumer spending is a direct consequence of the atmosphere of uncertainty and pessimism that characterizes a recession, making this the correct answer.